Last weekend Venezuelans welcomed home the first shipment of international gold reserves being returned to the country by the government of Venezuelan President Hugo Chavez. The arrival to Caracas of some US $300 million worth of gold comes just three months after the Venezuelan President announced plans to repatriate the vast majority of the country’s gold sent to Europe and North America by previous governments.

Repatriating the country’s gold reserves is part of Chavez administration efforts to provide economic stability to Venezuela as well as consolidate the drive towards economic integration in both Latin America and the Global South. Data from the Venezuelan Central Bank (BCV) indicates that once the expected 218 metric tons of gold arrive in country the value of domestic gold reserves is to increase by over US$11 billion – from a current $7 billion to an estimated $18.3 billion.

In the words of the Venezuelan President, the country’s repatriated gold is being returned “to the place it should have never left...The vaults of the Venezuelan Central Bank (BCV), not the bank of London nor the bank of the United States”.

Protecting Reserves from Crisis

According to BCV President Nelson Merentes, the repatriation of Venezuela’s gold reserves is “a historic act” and demonstrates the “political and economic sovereignty” achieved by the Venezuelan people through their Bolivarian Revolution.

Speaking to reporters on Monday, Merentes explained that Venezuela is “bringing (home) the gold because global markets are turbulent and protection is needed”. He also confirmed rumors that the first $300 million in repatriated gold was pulled from reserves currently held in England.

As part of an economic strategy focused on pleasing the International Monetary Fund (IMF), Venezuela’s business elite and their allies in government spent most of the 1980’s and 90’s depositing the country’s gold reserves abroad, principally in England.

In a report released on Tuesday, British Finance Minister George Osborne told his country’s parliament that, “much of Europe appears to be heading into recession” and, if a recession sets in, “it may prove hard to avoid one here in the UK”.

Osborne also announced that economic growth in the UK for 2012 will only reach 0.7 and, in response, proposed that government put a cap of 1% on pay raises for public sector workers after they suffer through a two year pay freeze already in place for 2012-2013.

In addition, he increased the figure of public sector jobs expected to be lost by during the period by 310,000 – from 400,000 to 710,000. On Wednesday, an estimated 2 million public sector workers in Britain participated in a national strike against the antiworker measures.

Venezuela currently stores 16,908 gold bars in banks across England, Switzerland, the United States and Canada. According to BCV President Merentes, the majority of this gold will be returned to the country in “the very near future”. The actual dates of arrival are being kept secret for “security reasons”, he said.

Per BCV data, Venezuela will house 29,265 gold bars after the repatriated gold arrives. Basing calculations on this amount, in addition to reserves held in US dollars, the BCV asserts Venezuela’s economic reserves now total $30 billion.

Monetary Gold Reserves

At the time of the August decision to repatriate Venezuela’s international gold reserves, the Venezuelan government also nationalized the country’s gold industry.

As part of this decision, on Monday the Venezuelan Central Bank announced plans are underway to install a monetary gold processing plant in the country, which once completed, will serve to convert gold into “monetary reserves” for Venezuela and all of Latin America.

The region, BCV President Merentes explained, “doesn’t have a convertible currency”. “Across the entire world the number of convertible currencies doesn’t even reach ten, which means that many countries (including Venezuela) need to have internationally convertible reserves” so as to make decisions within a global economic context.

“These reserves function as a tool for the development of global perceptions regarding how the economy is being managed”, he stated.

In Venezuela, Merentes explained, “the two most important and valuable resources are oil and gold. Gold has an important financial value and our goal must be to convert as much of it as possible into monetary gold”. To do so, the BCV announced plans to construct a monetary gold processing plant that is to receive gold sourced from across Venezuela and Latin America.

Baseless Opposition Claim

Since the repatriation process was first announced in August, opposition spokespeople have attempted to discredit government efforts with claims that returning the gold is both “unsafe” and “costly”. Anti-Chavez lawmakers also accuse the national government of returning the gold as part of bilateral agreements with the People’s Republic of China.

Responding to opposition accusations, Merentes recently affirmed that anti-Chavez forces and their allies in the private media “have created a false perception that the move (repatriation) is somehow linked to the relationship with China, and that just isn’t the case”.

“This gold will continue to serve as a reserve, alongside the gold already in country, with the same value and financial backing”, Merentes stated. Commenting on the Venezuelans who gathered to welcome home their country’s gold over the weekend, BCV President Merentes said he hadn’t prepared himself to see “such elevated levels of enthusiasm” and that seeing people on the streets of Caracas waving flags and celebrating the gold’s arrival “was very emotional, very moving”.

Backing Regional Integration

Venezuela’s first batch of repatriated gold arrived in Caracas just days before the country hosts the founding summit of the Community of Latin American and Caribbean States (CELAC), described by many analysts as “an Organization of American States without the US or Canada”.

Speaking to Venezolana de Television (VTV) last week, Venezuelan Foreign Minister Nicolas Maduro explained that the formation of CELAC comes at a time of “very favorable circumstances…the great political will of the governments in the region and the great political consciousness of our peoples”.

According to Maduro, Latin America today is a “continent that is more awake, more independent, that acts with greater liberty”, adding that CELAC will aim to make the region “a great zone of peace and integral development”.

One of the main areas of integration in the region has been economic, with the creation of the Bank of the South and a new currency, the SUCRE, used for inter-regional trade. A goal of CELAC is to “continue increasing economic sovereignty in the region”, affirmed Maduro.

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